As the Reserve Bank contemplates an interest rate rise announcement for later this afternoon, the August trade figures reveal the impact of the sharp rise in the value of the Aussie dollar, especially against the US currency.
In fact, the ABS used an exchange rate average of 83.44 US cents for August, which was the highest average since the same month of last year when it was 88.10 US cents.
That has helped drive down the value of imports and export returns.
Exports fell 2% in August and imports fell 3% to produce a trade deficit of $1.524 billion (seasonally adjusted), down 15% on the restated (upwards) July deficit of $1.783 billion (originally $1.556 billion).
Helping drive imports lower was the rise in the value of Australian dollar, which helped produce a sharp fall in the value of the oil imports, consumption goods and intermediate and other merchandise goods ($592 million, $305 million and $729 million respectively).
Exports fell thanks to to the stronger dollar, which helped produce a fall in the value of coal (down $248 million), non-rural goods (off $318 million) and rural goods (down $62 million).
Economists had forecast a deficit of $900 million for August.
The figures reveal a trade account still being battered by the weak global economy and the sluggish level of domestic demand.
Exports have fallen by 25%, or more than $6.7 billion from September 2008, thanks to the rise in the value of the Aussie dollar, sharply lower prices for coal, iron ore and oil and LNG. Volumes have also fallen, especially for coal.
Imports are down in the same period: down $4.3 billion or about 17%. The rise in the value of the Australian dollar has helped put downward pressure on import prices.
The RBA board would not have found any evidence of an overheating economy from those figures, merely confirmation that the local economy was still subdued, while import costs were being depressed by the strong value of the dollar and exports returns slashed by the same factor.